Lack of paydirt erodes political program

It must not just be
Kevin Rudd
who wonders whether the resources tax debate was worth all the trouble.

Wayne Swan
must be wondering whether all the pain, all the subsequent negotiations, were worthwhile too, given all the effort is not going to raise much money, and that the cost of the deal done with the miners last July is an eye-watering $60.5 billion over the decade.

The documents released on the Treasury website give the first taste of just how expensive a backdown the government made last July.

The $3 billion annual total forecast for what the tax will turn over later in the decade is a bit less than double the government is proposing to raise from its controversial flood levy.

But the cost of trying to get the tax up has been significantly higher: a prime minister, and an aggressive campaign by the mining sector against the government before and during last year’s election campaign.

Given that these numbers are likely to be even lower now as a result of the rising Australian dollar and subsequent concessions given to the miners, there must be a question mark over the government’s capacity to comfortably deliver the tax reforms it promised to fund with the mining tax.

This is not just a question of the dollars and cents but a question of the whole political rationale of the tax.

That is, the idea had originally been to establish a revenue base that would ensure Australia maximised its public return from a historic mining boom – that Australians would “share" the benefit of the boom and that some of the benefit could be locked away for future generations in the form of infrastructure and greater savings.

Related Quotes

Company Profile

Now it appears the new revised tax – even before it is probably further modified because of a brawl with the states over royalties – will not provide that money, nor that transfer of wealth.

It leaves the government with the problem of how to finance the heavy infrastructure demands that partly flow from the resources sector itself, and how it locks away some of that wealth for the future.